Centre chalks out plans to deal with Suez Canal blockage that may choke India’s trade

Post By : Karvi Rana
Post Date : March 27, 2021
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Despite several efforts, the Suez Canal stay blocked in both directions as the container ship operated by Evergreen ran aground and became lodged sideways across the waterway due to strong winds and sandstorms early on March 23.

The Suez Canal is used by ships to travel between Asia and Europe to avoid going around Africa, thus saving many days in the process. With every passing day, the blockade is raising logistical concerns for the shipping industry which is on its way to make a recovery after the pandemic.

Looking at the issue in hand, the government has chalked out a four-point action plan to deal with the situation arising from the blockage of the Suez Canal including advising ships to re-route via the Cape of Good Hope.

The plan was chalked out in a meeting on Friday convened by the logistics division of the Department of Commerce and includes steps such as prioritization of cargo, freight rates, advisory to ports, and re-routing of ships.

The meeting was chaired by Pawan Agarwal, Special Secretary (Logistics), and attended by the Ministry of Ports, Shipping and Waterways, ADG Shipping, Container Shipping Lines Association (CSLA), and Federation of Indian Export Organisations (FIEO).

As per reports, over 200 vessels are waiting on the North and South sides of the Suez Canal and about 60 vessels are getting added to the queue daily.

“If two more days are taken before the efforts result in clearance of the canal (digging on both sides, extra barges being added on every high tide, tugboats, etc. to straighten the stuck vessel), the total backlog created would be about 350 vessels. It is estimated that this backlog should take about a week time to clear out. It was decided in the meeting to closely monitor the situation,” an official statement read.

On prioritization of cargo, the meeting concluded that FIEO, MPEDA, and APEDA will jointly identify cargo, particularly perishable cargo, for priority movement and work with the shipping lines for the same.

On concerns regarding freight rates, CSLA assured that the freight rates as per existing contracts will be honoured.

“A request has been made to the shipping lines to maintain stability in freight rates during the period of this crisis. It was noted that the situation is temporary and is unlikely to have a long-lasting impact,” the statement read. Once the blockage is over, it is expected that some bunching may take place, especially at the ports of JNPT, Mundra, and Hazira, it said.

“Ministry of ports, shipping and waterways assured to issue an advisory to these ports to gear up arrangements and ensure efficient handling during the forthcoming busy period,” the statement said.

Apart from this, the shipping lines were advised through CSLA to explore the option of re-routing of ships via the Cape of Good Hope. It was pointed that such re-routing usually takes 15 additional days.

The Suez Canal route is used for Indian exports/imports worth USD 200 billion to/from North America, South America, and Europe. It includes petroleum goods, organic chemicals, iron and steel, automobile, machinery, textiles and carpets, handicrafts including furniture, leather goods, etc. If the issue is not resolved sooner, the export-import figures which were showing recovery might take a slip.

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